- Aug 31, 2012
You've lost that lovin' feelin'?
He serves as the chief judge at the world's most prestigious classic car show, the Pebble Beach Concours d'Elegance. He's a widely respected automotive journalist and author, and he has a garage full of hot rods and other cool cars. But when it comes to his two teen children, "They haven't shown the slightest interest" in what's in that garage, Ken Gross laments.
Teenage rebellion? Perhaps, as teens often seem determined to resist their parents in just about every way imaginable, but one thing parent and child once always seemed to agree on was the importance of driving a car. Not anymore.
According to a recent study, nearly a third of American 19-year-olds haven't bothered to get their driver's licenses yet. Three decades ago, it was just one in eight who skipped that right of passage, according to Michael Sivak, of the University of Michigan Transportation Research Institute, or UMTRI. Among those 20 to 24, meanwhile, only 81 percent had gotten their licenses in 2010, down from 92 percent in 1983.
That may not necessarily be bad news for parents pacing the floor wondering where their kids are after curfew. But it's potentially disastrous for the auto industry. No, Millennials don't make up a large portion of the new car buying community – yet. But as a generation larger in number than the once sought-after Boomers, they were seen as the next big hope for carmakers after the downsized Gen-X.
Instead, "They seem lukewarm, at best," about buying cars, laments Jim Lentz, Toyota's top U.S. executive, something that could translate into a much weaker market than many had hoped for, especially as Millennials age and increase their earning power. With Boomers, the aging process yielded the best years the U.S. auto industry has ever had – but it's very possible that scenario won't repeat itself, at least with Gen-Y.
With Boomers, the aging process yielded the best years the U.S. auto industry has ever had.
"It's no longer a foregone conclusion that we will be able to sell cars to a large and emerging demographic," said Ford's President of the Americas Mark Fields, during an industry conference earlier this year.
Even those teens who do get licensed seem to be getting behind the wheel less often. An April study by the Frontier Group found that the average number of miles driven by those aged 16 to 34 dropped by 23 percent between 2001 and 2009 – to 7,900 miles annually. The national norm runs between 12,000 and 15,000 miles. Indeed, Gross says his son Jacob seems content with driving to school, football practice and then back home, rather than clocking as many miles as possible.
Why are young Americans losing their love affair with the automobile? There are any number of explanations. There's the economy, of course, which has even driven millions of older buyers out of the car market. Young buyers, in particular, are more likely to have to settle for higher interest – meaning costlier – subprime loans. Compounding matters, they're facing a market with higher unemployment and lower wages, and are leaving school saddled with massive loan debt.
Of course, that's all meaningless, anyway, for those who don't have a license and don't want one.
The biggest reason behind this dwindling love affair might be a series of broad societal shifts. A recent analysis of census data found that for the first time since the launch of the Model T, America's urban population is growing faster than in the suburbs. Even Detroit, with its crumbling neighborhoods, has seen a revival in its downtown core.
"We found that the percentage of young drivers was inversely related to the availability of the Internet."
Over that past century, the automobile has come to be seen as the ultimate American symbol of freedom, but "unlike previous years, there are many different ways that a Gen Y person can capture that freedom," contends Alexander Edwards, head of research at the California-based consulting firm Strategic Vision.
Have you ever tried to take a cellphone or iPad away from a teenager? For a large percentage of Millennials, texting has become the preferred form of communication, and "Virtual contact reduces the need for actual contact," suggests UMTRI's Sivak. "We found that the percentage of young drivers was inversely related to the availability of the Internet."
Some experts downplay recent trends. They suggest that as Millennials age they will return to traditional patterns. And, as they begin to raise families, the argument goes, they'll be forced to buy cars, love them or not.
Maybe, but historical precedent shows that buying patterns later in life are strongly influenced by what teenagers desire. Will a teen who puts a poster of a hot new cellphone on his wall lust for a Lamborghini or BMW later in life?
Studies suggest many young buyers see automobiles as a pox upon the environment, but research also suggests Millennials at least warm up a little towards hybrids, electric vehicles and hydrogen cars.
The uncomfortable reality may be that gone are the days when young Americans rushed to get their license.
"There's no silver bullet for Gen-Y," cautions Clay Dean, head of advanced design at General Motors. GM has been showing off two concepts aimed at Millennials in recent months: the Chevrolet Tru 140S and Chevy Code 130R. And Dean hints that they could provide the foundation for a low-priced model aimed at young buyers likely to reach market in the next several years.
Automakers are looking for other ways to connect with the digital generation. Chevrolet launched its marketing efforts for its new Sonic subcompact during the 2012 Super Bowl with an ad dubbed "kick flip,"featuring pro skateboarder Rob Dyrdek. Ford is investing heavily in Facebook and other social media efforts.
But the uncomfortable reality for automakers may be that gone are the days when young Americans rushed to get their license, worked long hours to afford a car and then spent the rest of their lives lusting after their next automobile.